Serving up a good deal for Singapore's food hawkers

Most commonly, fishball noodle prices went up by S$50 cents (Bt12) last year, compared to 2011; vegetable rice cost S$40 cents more. Chicken rice was not spared: the highest price for it went up from S$4 to S$4.50 and fewer stalls offered it at S$2.50 last year compared to 2011.

Last month, Environment and Water Resources Minister Vivian Balakrishnan warned that stalls may become vacant in future due to a hawker shortage. Despite a slew of government measures last year to lower rents, many entrants still found the going hard and gave up. The government used to set minimum rents for stalls. It scrapped this policy in March last year to reduce costs for hawkers.

The National Environment Agency (NEA) said that between March and December last year, 59 out of 112 food stalls were rented out at below previous minimum rents. Despite this, 13 of the cheaper stalls were returned to the agency within just six months of opening.

“The challenge is, will there be enough Singaporeans to do very hard work for very long hours?” said Balakrishnan.

Part of the problem is the current market-based system of awarding hawker stalls, which makes it more difficult for hawkers to make a living.

It was not always so. Itinerant street hawkers were resettled in hawker centres in the 1970s. These first-generation hawkers, who paid heavily subsidised rents, offered cheap fare. Many remain in business.

Today, subsidised hawkers make up four in 10 of all food and market stallholders. Those manning cooked-food stalls pay S$160 to S$320 in monthly rent. The low rental means they can charge low prices – hence keeping down prices.

But these first-generation hawkers can transfer their subsidised-rate stalls to only their immediate family. When they retire, and if family members do not want to continue the business, they return the stalls to the government. The stalls are then put up for auction. The NEA now holds monthly tenders for vacant stalls, which are awarded to those who offer the highest rents.

But leaving rents to market forces means that stalls in popular areas will fetch high rents. Successful bidders may then have to charge higher prices.

At the Newton Food Centre, for example, stall rents typically exceed S$2,000 a month. A plate of chicken rice there costs at least S$3, and as much as S$4 and higher. Comparatively, the same dish costs S$2.50 at the Taman Jurong Market and Food Centre, where monthly rents are usually less than S$1,000. Such a price disparity exists for other dishes at both centres.

The market-based system also means rents are likely to be low only in areas with poor human traffic; these hawkers may find it difficult to survive.

Although two stalls in the Taman Jurong centre were awarded record-low rents of just S$20 and S$21 a month last year, they are still empty.

A noodle seller, who operates a stall next to one of them said: “The location is very bad. We’re at the fringe of the top floor; people don’t even see us.” She has been working at her stall for eight years and relies on regulars to earn between S$1,000 and S$2,000 a month. As more stalls come under auction, higher prices seem likely. Hawkers said that their net profit now ranges from slightly more than S$1,000 to several thousands.

The government wants to have more people in the hawker trade under the current system but also wants hawker fare to be cheap. Are the two goals incompatible? Low prices mean less profit, which makes the job unattractive. Many Singaporeans today are put off by the long hours and hard labour involved, said those who have worked in the trade for decades. 

Earlier this year, the government chose two organisations to train people for the food and beverage industry, including hawker centres. Lessons will include cooking and stall management.

Koh Seng Choon, executive director of Project Dignity, one of the groups, said most applicants have been middle-aged men and women looking for a second career, partly in case they are laid off. “Young people prefer to go into bakery or Western cooking, as they feel they can get better profit margins,” he said.

Other experts said food tastes may be changing too. Between 2009 and 2011, the number of restaurants grew from 2,091 to 2,317, and their takings ballooned from about S$2.1 billion to S$2.7 billion.

“We have this culinary prejudice where we will pay S$20 for a pasta carbonara but will complain when the price of Hokkien mee increases from S$3 to S$3.50,” local food blogger Leslie Tay said.

To be fair, the government has done much to arrest price increases and to help new entrants to the trade. Besides scrapping minimum rents, the government also banned full-day sub-letting for new hawkers, which encouraged “stall speculation” and led to increased rents.

The government will build 10 new hawker centres by 2017 to increase the number of available stalls, especially in underserved areas. This will hopefully drive down rents. Social enterprises may also manage the new centres and introduce new ideas to keep the food affordable.

But more drastic action may be needed. The NEA could, say, extend subsidised rents for first-generation hawkers to all hawkers. In return, the agency could impose price caps. Since all rents will be the same, stalls could be balloted or awarded based on the lowest proposed food prices.

Richard Ng, a representative for Maxwell Food Centre stallholders, said such a system would be “very good” for consumers but may greatly reduce the government’s receipts from stalls. “And some people may get the subsidised stalls but rent them out at higher prices,” he added.

Other options could be to rent the stalls at fixed rates, set by the government, or to have a mix of market-based and fixed-rate stalls in each food centre.

Goh Ah Kee, president of the Bedok North 216 Food Centre and Market Hawkers’ Association, said the effectiveness of rent measures may be limited. Newcomers will still find it tough to compete. “I see it all the time. It can get very crowded but the lines are always outside the same old stalls. If you’re new, you may get one to two weeks of ‘novelty’ business. If you’re not good, you won’t survive,” he said.

Lower rents will also not help stalls in areas with poor traffic, he added. Better centre designs are needed.

Alternatively, each stall could be mandated to sell at least one low-cost dish. People who can afford higher prices can keep hawkers afloat while poorer customers will still have access to cheap fare. More can also be done to lower the hawkers’ other costs. Project Dignity’s Koh said hawker association heads could band together to help stallholders in different food centres bulk-buy ingredients at a lower cost.

Hawker food prices may still rise in future, given labour, utility and food ingredient costs, which have been rising in recent years.

Counter-intuitively, higher food prices may be a good thing if people are able and willing to pay. More people may then view the trade as a viable career. This is especially important not only because the hawker centre is an ingrained part of Singaporeans’ lives but also could be key to drawing tourists.

To ensure the longevity of this iconic feature of Singapore, building more hawker centres is a good first step. But the real challenge is keeping rentals low, prices cheap, woks oiled and the stalls and tables filled.